Indonesia’s recorded a 5.05 percent economic growth in 2023, much slower compared to 2022 but still solid and in line with the Indonesian government’s outlook, the country’s statistics agency BPS reported Monday, February 5, 2024.

Weaker consumption and a decline in exports due to low commodity prices were mainly to blame for the slower growth, as rising interest rates and an oversupply of strategic commodities, such as nickel, bite into the country’s economic expansion.

Domestic consumption continues to be the main driver for the country’s economy, making up 53.18 percent of its 2023 total GDP. On the production side, the sectors manufacturing, trade, agriculture, mining and construction, contributed the most to the growth with a combined share of more than 64 percent.

At Rp 20,892.4 trillion (over US$1.33 trillion) in total nominal GDP – or $4,919.7 per capita – the fastest growth was observed from within the Transportation and Storage sector, which expanded by 13.96 percent year-on-year, followed by Food and Beverages sector with 10.01 percent.

In quarterly terms, Indonesia's economy saw a year-on-year increase of 5.04 percent compared to the same period in 2022. On production terms, the growth was led by a 10.33 percent rise in the Transportation and Storage sector. Meanwhile, an 18.11 percent surge in government spending for the nationwide general elections led the growth on the consumption side.

Spatially, the provinces Maluku and Papua led the growth at 6.94 percent, followed by Sulawesi at 6.37 percent, and Kalimantan at 5.43 percent, compared to 2022. That said, the Island of Java remains the largest contributor with 57.05 percent of the nominal share with a growth rate of 4.96 percent.

Moving into 2024, the government anticipates an acceleration in the economic growth rate to 5.2%. This optimism is driven by the expectations of increased spending due to the general elections scheduled for February 14, and a resurgence of private investment as political uncertainties subside, possibly stimulating GDP growth.